Since the first online transactions were implemented, the way in which we pay for goods and services has drastically changed. This methodology is set to change again with the advent of a new type of technology – blockchain. This article looks at what blockchain technology is and how it is set to make disruptions in the online world.
What is Blockchain Technology?
Blockchain technology is a little difficult to explain, but we will do our best! In essence, it facilitates online transactions over a peer-to-peer network (P2P). In traditional transactions, a middleman is used such as a bank or a financial institution. This middleman is trusted and takes care of everything. In blockchain-based transactions, such as bitcoin exchanges, there is no middleman, transactions are conducted directly between the two end parties.
The instigator will initiate the transaction and have her credentials verified. The transaction details will then be sent to a public digital ledger that keeps a record of what has transpired. This is known as adding a block to the chain – hence the term blockchain.
A block of transactional data is added to the ledger and then broadcast across the P2P network to continue the chain. The transaction is then passed to the recipient and processed. This all happens usually fast and the lack of a middleman means a much quicker transaction time than traditional methods.
Why is Blockchain Technology a Huge Development?
As you can guess, the lack of a middleman means that blockchain based transactions are much more cost-effective and efficient. No middleman means no transaction fees. In traditional online transactions, the forwarding merchant or bank may expect a percentage fee for their involvement.
This doesn’t happen in blockchain based transactions, therefore, there is usually no extra cost involved at all. Furthermore, as the transaction passes straight from A to B, instead of A through C to B, the speed is much faster than traditional methods. In fact, BitFortune.net provides information which states that blockchain has the potential to not only increase the speed of financial transactions, but make them cheaper and more secure as well.
Aside from the improved cost and speed, the blockchain technology also represents an improvement in security and transaction visibility. All blockchain transactions are encrypted. This means that it is nearly impossible to read that data.
Furthermore, the public blockchain ledger used to facilitate transactions is visible to anyone with access. This means that there is an indisputable proof of every transaction, and therefore no room for disputes or non-repudiation of data.
How is Blockchain Technology Already Being Used In Society?
As you can see, it is clear that blockchain technology has a host of benefits over traditional online transactions. This is why it is causing disruptions and seeing an increase in development and usage in many different areas of business. The following are some ways that the blockchain technology is currently being used:
This is one of the most interesting ways that the blockchain technology is being used. Due to the advent of a public ledger that can be viewed by anyone with access, blockchain technology is actually perfect for use in public votes.
Using this technology for voting means that there is little to no room for fraud or error – every vote would be logged on a public ledger. The government of Sierra Leone has actually used blockchain verified voting during its early 2018 elections.
Another fantastic and varied use for this technology is in the energy industry. Various different companies are testing and actively using it to improve energy payment transactions and to work in tandem with new technologies such as electric charging stations for vehicles. KWATT and KEPCO, for example, are two companies actively using blockchain technology to further their energy supply businesses.
Online music and streaming is a prime industry for blockchain technology as it often involves many small transactions (i.e. for single songs or albums). BitTunes, for example, is a company that uses a blockchain based sharing platform. Users can share and download various types of media using Bitcoin.
Aside from the above, many companies are accepting or plan to accept cryptocurrencies as a form of payment, which is a huge development for the blockchain technology. Companies such as McDonald’s, Argos, and OpenBazaar are all primed to accept it in the future, and many more have already started the process.
We hope you have found this article insightful. As you can see, the blockchain technology is here to stay! Financial institutes have a tough road ahead – they can either accept the fact that it is going to play a prominent part in online transactions in the future, or they can try to block its progress and risk missing out.